How this Rwandan potato crisps company wants to compete against Lay's

BY DINFIN MULUPI | 2 MAY 2016

Pascal Murasira is co-founder and managing partner of Hollanda FairFoods, a Rwanda-based food-processing company that manufactures potato crisps under the brand name Winnaz. Murasira tells How we made it in Africa about the opportunity for commercial potato processing in Rwanda, the challenges associated with food packaging, and his plans to position Winnaz as the healthiest potato-based snacks brand in the region. Below are edited excerpts.

What was the motivation behind the business?

I previously worked for NGOs in the agriculture industry and I noticed that despite being a leading producer of potatoes in sub-Saharan Africa, there was limited value addition in commercial processing. Rwanda was importing a lot of snacks from Kenya, South Africa, Europe ... yet all the raw materials we needed is available locally.

In 2013 I met my business partner Thijs Boer and we decided to set up our own potato crisps manufacturing business. We began production in 2015. Winnaz crisps comes in one flavour in 40g packaging, selling at about RFW550 ($0.7). We plan to introduce a bigger size of 150g, unveil additional flavours, and start to serve big buyers such as hotels that need products in bulk. Our core target market is the urban, young consumer in Rwanda and across the region. We currently retail in Rwanda and Uganda, with plans to expand to other countries in the region.

How did you finance the company?

My partner and I had thought of starting small, sourcing cheaper machines from China, and continuing to maintain our jobs as we ran the business. However, some institutions gave us additional money, so we got larger machines of better quality from the Netherlands and Spain. We got financing from the Dutch government and we have recently partnered with the United States Agency for International Development (USAID) to expand our production capacity, improve the value chain and reduce waste. We have also raised capital from some investors in the Netherlands.

If you were given $1m to invest in your company now, where would it go?

I would use the money on market development. We need to position our product as a premium brand that can compete with foreign brands such as Lay's. Our potato crisps are locally-produced, of good-quality, and fresh because our logistics supply chain is short. We also don't use chemical additives and our packaging material is biodegradable. We want to position ourselves as the most environment-friendly and most innovative potato crisps producer in the region.

We have noticed in high-end supermarkets where there is a wide variety of snacks, consumers appreciate what is perceived to be the healthier option. This is an established trend in developed countries but it is slowly taking shape in our region and we want to capitalise on that. Consumers are gradually starting to appreciate our products but it has cost a lot of time and resources to ensure presence in all grocery shops in Rwanda. We have already expanded to Uganda where we stock in major retailers in Kampala and we want to grow our presence in other parts of the country. We now want to enter the Burundi and eastern Congo markets and this requires financing, and new strategies to be relevant to the socio-economic situation there.

What risks does your business face?

I think the biggest external potential threats we face could likely be rules and policies that don't consider local industries. An example is when government signs trade deals to open up the market without compelling importers to be held to the same regulations as local producers. I think standards need to be harmonised and imposed on all players, otherwise we end up with a flooded market where local producers are inhibited from fairly competing.

Right now the biggest challenge we face is packaging. In Rwanda there is a ban on non-biodegradable plastic bags, which is very good for the environment. But of course using biodegradable material increases our costs – conventional packaging costs about RFW12 to RFW15, while a biodegradable pack can cost up to RFW120 for a small bag. It is a big difference.

The worst thing is that the policy doesn't address the importation of competing products that are packaged outside Rwanda. It is a problem because some foreign brands are allowed to be on the same shelves as our products, yet they are using conventional packaging. This makes it cheaper to produce elsewhere, take advantage of relaxed packaging policies there, and just import the finished products to Rwanda.

Tell us about your biggest mistake, and what you've learnt from it.

I think the first mistake we made was thinking we could be our own accountants. We did not hire an accountant right away and that led to some mistakes in our financial system as we mixed up personal and company resources.

Another mistake we made was believing too much of what people we thought were experienced in the food retail business told us. We signed a contract with a distributor but we were not very happy with the results. We lost track of the sales, we were disconnected from the consumer and that cost us precious time at the beginning of the business. We learnt you really satisfy the consumer, and grow faster when you are in touch with your consumer or clients. So we decided to handle the distribution ourselves.

Describe your most exciting entrepreneurial moment.

One day I went to a supermarket in Kigali and I saw someone come and look at all the bags of potato crisps that were on the shelves and among them all she picked ours. It was the first time I experienced that. I felt so emotional. I wanted to talk to her but I didn't. I was so emotional because that experience reminded me of all the days we pondered what we would name the brand, what the packaging would look like, and the struggles we went through to import machines and set up the factory.